Zim to clear $1,7bn debt by 2018

Source: Zim to clear $1,7bn debt by 2018 | The Herald June 27, 2017

ZIMBABWE is likely to clear $1,7 billion of interest and penalties it owes international financial institutions by next year and has made progress in re-engaging them, the World Bank’s country director said. “The principle of arrears clearance has been agreed by the World Bank and African Development
Bank,” Paul Noumba Um said in an interview with Bloomberg in Harare.

“I don’t think we will be able to have everything closed and settled by the calendar year, but 2018 might be the year we will probably see a better outcome.”

Zimbabwe expects to secure about $2 billion in external lines of credit from three preferred creditors once Government clears the outstanding arrears to foreign lenders, according to the Reserve Bank of Zimbabwe.

Last month, Finance Minister Patrick Chinamasa said the country had secured a syndicated loan put together by the African Export-Import Bank that will enable it to clear the $1,7 billion of arrears with the two lenders.

Re-engagement would mean Zimbabwe would be entitled to receive financial support from the World Bank again.

The country has tabled a $1,7 billion debt clearance plan to the World Bank and the Africa Development Bank (AfDB), which has already been approved.

The clearing of the arrears is expected to reduce country risk and open fresh avenues for credit from external private lenders.

Zimbabwe’s three preferred creditors are the African Development Bank (AfDB), World Bank and the International Monetary Fund (IMF). Last October Zimbabwe paid $107,9 million it owed to IMF.

The AfDB and World Bank are owed a combined $1,7 billion. A preferred creditor is a creditor receiving a preferential right to payment upon the debtor’s bankruptcy under applicable insolvency laws.

As of October, the owed lenders including the International Monetary Fund, World Bank and AFDB about $9 billion, according to the Finance Ministry.
While “the process has been painfully slow,” Zimbabwe remains committed to re-engagement, Chinamasa told reporters last Wednesday.

The minister has been leading efforts to revive the country’s economy and tap fresh financing from the IMF.

Zimbabwe abandoned its own currency at the height of inflation in 2009, opting instead, for a basket of currencies that includes the United States dollar, South

Africa’s rand, the pound and Botswana’s pula.
The country’s economy is expected to expand 2,8 percent in 2017, the World Bank said, compared to the previous forecast of 3,8 percent. — Bloomberg/Bulawayo Bureau.